<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission file number:
-------------
IN STORE MEDIA SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Nevada 84-1249735
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
15423 East Batavia Drive, Aurora, Colorado 80011
(Address of principal executive offices and Zip Code)
(303) 364-6550
(Registrant's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's classes of common stock, as of
August 9, 2000 is 56,650,379 shares, $.01 par value.
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Balance Sheet - December 31, 1999 and June 30, 2000 (unaudited) 2 and 3
Statement of Operations - For the Three Months Ended June 30, 1999
and 2000 (unaudited). 4
Statement of Operations - For the Six Months Ended June 30, 1999
and 2000 and for the period from December 30, 1992 (inception)
through June 30, 2000 (unaudited) 5
Statement of Stockholders' Deficit - For the Six Months Ended
June 30, 2000 (unaudited) 6
Statement of Cash Flows - For the Six Months Ended June 30, 1999
and 2000 and for the period from December 30, 1992 (inception)
through June 30, 2000 (unaudited) 7
Notes to Unaudited Financial Statements 8
Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
PART II. OTHER INFORMATION 13
1
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1999 and June 30, 2000
(Unaudited)
ASSETS
1999 2000
------------- -------------
Current assets:
Cash and cash equivalents $ 248,325 $ 90,847
Accounts receivable - Continuum - -
Note receivable - related party 63,860 67,053
Inventory 117,295 117,295
Stock subscription receivable (Note 4) - 25,000
Other current assets 1,559 5,167
------------- -------------
Total current assets 431,039 305,362
Property and equipment, at cost:
Manufacturing equipment 341,277 341,562
Office furniture and equipment 123,016 123,088
Leasehold improvements 55,228 55,228
------------- -------------
519,521 519,878
Less accumulated depreciation and amortization (206,304) (237,704)
------------- -------------
Net property and equipment 313,217 282,174
Other assets:
Advances and note receivable - related parties 45,085 46,131
Loan issuance costs - 10,000
Deposits 29,159 29,159
Patent costs, net of accumulated amortization of
$18,089 (1999) and $20,167 (2000) 58,035 73,753
------------- -------------
Net other assets 132,279 159,043
------------- -------------
$ 876,535 $ 746,579
============= =============
See accompanying notes.
2
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1999 and June 30, 2000
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
1999 2000
------------- -------------
Accounts payable $ 587,674 $ 560,960
Interest payable 599,284 751,931
Accrued wages - 25,486
Notes payable (Note 2) 2,140,087 2,190,087
Notes payable-shareholder 90,000 91,000
Obligations under capital leases 3,238 3,238
------------- -------------
Total current liabilities 3,420,283 3,622,702
Long-term liabilities:
Obligations under capital leases - -
Debenture payable - related party 247,880 247,880
------------- -------------
Total long-term liabilities 247,880 247,880
Stockholders' deficit (Notes 2, 4 and 5):
Preferred stock, no par value; 5,000,000
shares authorized, 2 (2000) shares issued
and outstanding - 500,000
Common stock, $.01 par value; 100,000,000
shares authorized, 63,828,527 (1999)
and 66,025,121 (2000) shares issued 638,285 660,251
Additional paid-in capital 10,242,453 10,301,676
Treasury stock, at cost; 9,374,742 shares (563,750) (563,750)
Deficit accumulated during the development stage (13,108,616) (14,022,180)
Total stockholders' deficit (2,791,628) (3,124,003)
------------- -------------
$ 876,535 $ 746,579
============= =============
See accompanying notes.
3
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the Three Months Ended June 30, 1999 and 2000
(Unaudited)
1999 2000
------------- -------------
Costs and expenses:
Research and development $ - $ 6,171
General and administrative 209,916 304,041
Depreciation and amortization 14,853 16,738
------------- -------------
Operating loss (224,769) (326,950)
Other income (expense):
Interest income 1,027 3,289
Litigation settlement - -
Debt conversion costs - -
Interest expense (Note 2) (82,815) 711
------------- -------------
Total other income (expense) (81,788) 4,000
------------- -------------
Net loss (Note 3) $ (306,557) $ (322,950)
============= =============
Basic and diluted net loss per common share $ (.01) $ (.01)
============= =============
Weighted average common shares outstanding 55,330,000 56,633,000
============= =============
See accompanying notes.
4
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 and 2000
and for the Period from December 30, 1992 (inception) through June 30, 2000
(Unaudited)
Cumulative
amounts from
1999 2000 inception
------------- ------------- -------------
Costs and expenses:
Research and development $ - $ 6,171 $ 3,231,173
General and administrative 407,673 749,112 5,534,775
Depreciation and amortization 29,706 33,477 257,869
------------- ------------- -------------
Operating loss (437,379) (788,760) (9,023,817)
Other income (expense):
Interest income 1,027 4,431 86,830
Litigation settlement - - (156,250)
Debt conversion costs - - (385,144)
Interest expense (Note 2) (262,379) (129,235) (4,543,799)
------------- ------------- -------------
Total other income (expense) (261,352) (124,804) (4,998,363)
------------- ------------- -------------
Net loss (Note 3) $ (698,731) $ (913,564) $(14,022,180)
============= ============= =============
Basic and diluted net loss per
common share $ (.01) $ (.02) $ (.30)
============= ============= =============
Weighted average common shares
outstanding 55,945,000 55,919,000 46,517,000
============= ============= =============
See accompanying notes.
5
<PAGE>
<TABLE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Six Months Ended June 30, 2000
(Unaudited)
<CAPTION>
Deficit
accumulated
Additional during the
Preferred stock Common stock paid-in Treasury development
Shares Amount Shares Amount capital stock stage
------- ---------- ------------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 - $ - 63,828,527 $ 638,285 $ 10,242,45 $ (563,750) $(13,108,616)
Sale of common stock for cash and in
exchange for stock offering services
($1.00 per share) (Note 4) - - 50,000 500 49,500 - -
Exercise of warrants - - 82,392 824 4,669 - -
Issuance of common stock for employee
compensation ($.90 per share) - - 55,000 550 48,950 - -
Warrants exercised on a cashless basis in
consideration for loan and offering
expenses - - 2,009,202 20,092 (20,092) - -
Extension of exercise period of warrants
issued in connection with debt offerings
(Note 2) - - - - (23,804) - -
Sale of preferred stock for cash (Note 4) 2 500,000 - - - - -
Net loss for the six months ended
June 30, 2000 - - - - - - (913,564)
------- ---------- ------------ ---------- ------------ ----------- -------------
Balance, June 30, 2000 2 $ 500,000 66,025,121 $ 660,251 $ 10,301,67 $ (563,750) $(14,022,180)
======= ========== ============ ========== ============ =========== =============
</TABLE>
See accompanying notes.
6
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS For the Six Months Ended
June 30, 1999 and 2000
and for the Period from December 30, 1992 (inception) through June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
amounts
from
1999 2000 inception
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (698,731) $ (913,564) $(14,022,180)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 29,706 33,477 257,869
Common stock issued for services,
patents and payables - 49,500 1,382,700
Amortization of debt issuance costs 72,568 (23,804) 1,694,704
Reduction in note receivable - related
party charged to research and
development 244,311 - 244,311
Changes in assets and liabilities:
Accounts receivable and notes
receivable 100,000 (3,193) (67,053)
Inventory - - (117,295)
Accounts payable (298,756) 26,714) 560,960
Interest payable 873 152,647 861,821
Accrued wages - 25,486 25,486
Other - (3,608) (5,167)
------------- ------------- -------------
Total adjustments 148,702 203,791 4,838,336
------------- ------------- -------------
Net cash used in operations (550,029) (709,773) (9,183,844)
Cash flows from investing activities:
Purchase of property and equipment (8,060) (357) (257,911)
Advances - related party (12,351) (1,046) (290,442)
Patent costs (247,637) (17,795) (93,918)
Lease deposits - - (29,159)
------------- ------------- -------------
Net cash used in investing activities (268,048) (19,198) (671,430)
Cash flows from financing activities:
Proceeds from sale of common stock 1,311,974 55,493 5,366,140
Proceeds from the sale of preferred stock - 475,000 475,000
Purchase of treasury stock (520,000) - (520,000)
Proceeds from common stock subscriptions - - -
Loan issuance costs - (10,000) (10,000)
Proceeds from (repayments of) stockholder
loans (21,000) 1,000 91,000
Repayments of capital leases (9,094) - (10,849)
Proceeds from notes payable - 50,000 4,740,000
Repayments of notes payable - - (185,170)
------------- ------------- -------------
Net cash provided by financing
activities 761,880 571,493 9,946,121
------------- ------------- -------------
Net increase (decrease) in cash (56,197) (157,478) 90,847
Cash and cash equivalents at beginning of
period 316,444 248,325 -
------------- ------------- -------------
Cash and cash equivalents at end of period $ 260,247 $ 90,847 $ 90,847
============= ============= =============
</TABLE>
See accompanying notes.
7
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
1. Basis of presentation
The accompanying financial statements have been prepared by the Company,
without audit. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of the financial
position as of June 30, 2000, and the results of operations and cash flows
for the periods ended June 30, 1999 and 2000.
Basis of presentation and management's plans:
The company's financial statements have been presented on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company is in the
development stage and has been primarily involved in research and development
activities. This has resulted in significant losses ($14,028,672 since
inception) and a stockholders' deficit at June 30, 2000 of $3,130,495. The
Company's continued existence is dependent on its ability to obtain the
additional funding necessary to complete development of the coupon clearing
system and successfully market the product.
During the three months ended June 30, 2000, two shares of Series A preferred
stock were sold resulting in gross proceeds of $500,000 which provided
additional liquidity for the Company for current operations. The Company is
offering for sale up to $3,500,000 of Series A preferred stock. The financial
statements do not include any adjustment relating to the recoverability and
classification of recorded asset amounts or the amount and classification of
liabilities or other adjustments that might be necessary should the Company
be unable to continue as a going concern in its present form.
2. Notes payable
On March 1, 2000, the Company borrowed $50,000 from two individuals evidenced
by notes payable bearing interest at 10% per annum. Interest on the notes is
payable quarterly and the notes are due on demand anytime after April 1,
2000. The notes are convertible, at the option of the holder, into the
Company's common stock at 50% of the average closing sale price of the
Company's common stock at the time of conversion. During July 2000, the notes
were paid in full.
In connection with the notes payable issued in 1996, 1997 and 1998, the
Company issued warrants to purchase the Company stock exercisable for a three
year period. As these warrants have neared their initial expiration dates,
the Company has extended these warrants first for 120 days and then for
successive 90 day periods.
For accounting purposes, the Company is treating these extensions as stock
appreciation rights and has recorded interest expense of $959,895 in 1999
related to the warrants which have been extended. During the quarter ended
June 2000, the price of the Company's stock declined and therefore, the value
assigned to the warrant extensions declined by $78,648. This combined with
the first quarter expense of $54,844 results in a decrease in interest
expense for the six months ended June 30, 2000 of $23,804.
8
<PAGE>
IN STORE MEDIA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
3. Income taxes
No provision for income taxes is required at June 30, 2000 because, in
management's estimation the Company will not recognize any taxable income
through December 31, 2000.
4. Private placements
During November 1998, the Company commenced a private placement of common
stock and warrants. The Company proposes to sell a minimum of 18 units and a
maximum of 68 units at a price of $100,000 per unit which could result in
gross proceeds to the Company of between $1,800,000 and $6,800,000 before
deducting expenses. Each unit consists of 100,000 shares of common stock and
warrants to purchase 100,000 shares of common stock exercisable during the
first year at $1.25 per share and at $1.50 per share during the second year.
During the six months ended June 30, 2000, .5 units have been sold resulting
in gross proceeds of $50,000. As of June 30, 2000, the Company has concluded
this offering.
During the three months ended June 30, 2000, two shares of Series A preferred
stock were sold in a private placement resulting in gross proceeds of
$500,000 which provided additional liquidity for the Company for current
operations. $25,000 of the proceeds were received in July 2000 and have been
reflected as stock subscriptions receivable in the financial statements. The
sale of the two shares was part of a private offering of up to 14 shares of
Series A preferred stock. If all 14 shares of the Series A preferred stock
were sold this would generate gross proceeds of $3,500,000, however, there
can be no assurance that the Company can sell any additional shares. The two
shares of preferred stock which have been sold are convertible into 1,300,000
shares of the Company's common stock and carry a dividend rate of 8%
annually.
5. Subsequent events
During July and August 2000, the Company entered into employment agreements
with two individuals. In connection with these agreements, the Company issued
options to purchase 189,375 shares of the Company's common stock at exercise
prices ranging from $.25 per share to $1.00 per share, exercisable for a two
year period.
9
<PAGE>
Item 2.
Management's Discussion and Analysis of financial condition and results of
operation
Overview
The Company is a development stage company engaged in the development of its
system for distributing and electronically clearing coupons, certain components
of which are patented. The Company has generated no revenue from operations and
has continually incurred losses of $14,022,180 since inception through June 30,
2000. The Company expects to incur additional losses through the end of the 2000
fiscal year.
At June 30, 2000, the Company had negative stockholders' equity of $3,124,003,
which reflects $10,898,177 of paid in capital (net of amount attributable to
treasury stock) less accumulated deficit of $14,022,180. The excess of the
accumulated deficit amount over paid in capital primarily is the result of the
amount of interest expense incurred in connection with short-term convertible
notes and debentures by the Company and its predecessor in private transactions
in 1996, 1997, 1998 and 1999. At June 30, 2000, the Company had a working
capital deficit of $3,317,340, which is equal to the amount of $305,362 in
current assets less $3,622,702 in current liabilities on such date.
The Company plans to continue on-going development of its coupon distribution
and clearing system, to the extent permitted by available financing. The Company
will require additional funds to continue its planned development efforts and
implement its plan of operation over the next 12 months. The Company is actively
pursing several financing opportunities. Some of the financing alternatives
involve an investment directly into the Company, and others involve an
investment into a subsidiary that is created to develop and operate one of the
Company's products as a business unit. The Company is unable to provide any
assurance that such additional funds will be available on commercially viable
terms or at all. The Company may be forced to discontinue or curtail its
operations and on-going development efforts if sufficient funds do not become
available to the Company in a timely manner. Management believes that a major
capital restructuring will be required in order to attract investment capital.
The Company is continuing to pursue alternative sources of financing, however,
currently there are no capital funding transactions pending.
Through June 30, 2000, the Company remained burdened with debt obligations and a
continuing lack of working capital.
Financial Condition
The Company had $746,579 in total assets and approximately $3,870,582 in total
liabilities at June 30, 2000, as compared to $876,535 and $3,668,163 at the end
of fiscal 1999, respectively. Accounts payable and accrued expenses at the end
of fiscal year 1999 were $1,186,958 as compared to $1,338,377 at June 30, 2000.
The Company had a working capital deficit of $3,317,340 at June 30, 2000, as
compared to a working capital deficit of $2,989,244 at December 31, 1999. The
difference primarily is attributed to cash reductions of $157,478, and an
increase in accrued interest of $152,647.
10
<PAGE>
Results of Operations
The Company's operational costs historically have increased or decreased
primarily due to the expansion or contraction of the Company's ongoing research
and development efforts. The Company has incurred operating expenses of
$9,023,817 since the inception of the Company's predecessor in 1992 through June
30, 2000. These expenses include $3,231,173 in research and development expenses
and $5,534,775 in general and administrative expenses. Subject to the
availability of additional funds, the Company expects its operational expenses
and costs to increase as it expands its efforts to complete the development of
its systems, products and services, and expects to commence manufacturing and
installation of its equipment. The Company also expects operational costs to
increase as it expands its marketing and promotional efforts in connection with
the introduction of its products and services.
Quarter Ended June 30, 2000, Compared To Quarter Ended June 30, 1999
For the quarter ended June 30, 2000, the Company sustained net operating losses
of $322,950, as compared to net losses of $306,557 for the quarter ended June
30, 1999. The increase in operating losses primarily was due to an increase in
general and administrative expenses, an increase in research and development, an
increase in depreciation and amortization expenses and a decrease in interest
expense.
The Company's operating expenses for 2000 increased by approximately 45% to
$326,950, as compared to operating expenses of $224,769 for the 1999 fiscal
quarter. Operating expenses consist of research and development expenses,
general and administrative expenses and depreciation and amortization costs and
expenses. The increase in operating expenses in 2000 was due to an increase in
general and administrative expenses by approximately $94,125 or 45% to $304,041
for the 2000 fiscal quarter, as compared to general and administrative expenses
of $209,916 for the preceding fiscal quarter. The increase in general and
administrative expenses primarily was due to the addition of Lawrence Mortimer
Executive Marketing and Sales, Michael Parsons Director of Project Management
and Technology and the addition of other marketing and programming personnel.
Depreciation and amortization costs increased by 13% to $16,738, as compared to
depreciation and amortization costs of $14,853 for the 1999 fiscal quarter. The
increase in depreciation and amortization costs primarily was due to the
purchase of additional computer equipment and production machinery.
The Company's net non-operating expenses (including non-operating interest
income and interest expense) decreased by approximately 105% to $4,000 for the
quarter ended June 30, 2000, as compared to non-operating expenses of $81,788
for the quarter ended June 30, 1999. The decrease was primarily due to a 101%
decrease in interest expense, which represented 100% of the non-operating
expenses for 2000 and approximately 100% of the non-operating expenses for the
1999 quarter. The decrease in interest expense was primarily due to the decrease
in value assigned to the extension of the warrant exercise period related to the
Company's debt offerings.
Liquidity and Capital Resources
Since inception, the Company's principal requirements for capital have been to
finance the cost of research and development of its coupon selection, dispensing
and clearing systems and related technologies, and to pay for expenses
associated with securing patent protection, formulating its business strategy
and developing strategic relationships with third parties, such as Unisys
Corporation, retailers and product manufacturers. The Company has historically
financed its operations through loans and investments by directors and officers,
and the sale of equity and debt securities in private transactions in reliance
upon exemptions from the registration and qualification requirements under
federal and state securities laws.
11
<PAGE>
At June 30, 2000, the Company had $3,622,702 in current liabilities, of which
$2,830,316 (including $640,229 of interest accrued thereon) was in the form of
convertible, short-term debentures issued by the Company and its predecessor in
private transactions during the 1998, 1997 and 1996 fiscal years. At June 30,
2000, the Company was in default of its obligations under the notes issued to
investors by the Company and its predecessor. A portion of the notes was
converted into shares of the Company's common stock during the 1998 and 1999
fiscal years. At June 30, 2000, notes in the aggregate principal amount of
$2,190,087 remained outstanding, as compared to notes in the aggregate principal
amount of $2,140,087 that were outstanding on December 31, 1999. The remaining
portion of the Company's current liabilities is primarily comprised of
continuing payment obligations of approximately $490,000 (at June 30, 2000 and
December 31, 1999) to Unisys Corporation. The Company relies on the availability
of additional capital to satisfy all such obligations.
The Company will require additional capital to continue and complete development
of its systems, to market its products and services and to implement its
business strategies. The Company has limited access to additional sources of
equity and debt financing and it can provide no assurance that additional funds
will be available on commercially acceptable terms or in a timely manner to
enable the Company to continue its operations as expected.
The Company's cash position has declined since the end of fiscal 1999 through
June 30, 2000. At June 30, 2000, the Company had available cash of $90,847, as
compared to available cash of $248,325 at December 31, 1999. At the current
spending rate of approximately $115,000 per month, the Company expects that such
funds will be insufficient to continue operations beyond the third quarter of
2000, unless additional funds are raised.
The Company is a party to an agreement to acquire the assets of the Partnership
for Shared Marketing, Inc. for $500,000 in cash and 1,500,000 shares of common
stock, contingent upon the availability of funding. Upon consummation of this
transaction, the Company will acquire a national database containing information
on approximately 73 million households, which the Company expects to contribute
to its wholly owned subsidiary, Data Driven Marketing, Inc. Other than in
connection with the above-described transaction, the Company has no future
commitments for capital expenditures.
During quarter ended June 30, 2000, the Company issued 132,392 shares of its
common stock and received cash of $55,493. The Company also issued 2,064,202
shares of its common stock to employees for services and to a consultant for a
cashless exchange of previously issued warrants.
The Company lacks sufficient capital or revenue to continue supporting the
losses generated by its development. The Company, as it is currently structured
has made progress in becoming an attractive investment for new equity investors
players, but the Company has a long way to go to qualify for conventional bank
or venture capital financing. Additional equity capital is necessary to finance
working capital for development. Management is resolved to continue the search
for the right financing formula as long as it can quickly put the Company, or
its subsidiaries, on the path to generate positive cash flow. Due to the current
financial condition of the Company and the relative lack of liquidity in the
market for the Company's common stock, no assurance can be made that the Company
will be successful in raising any substantial amount of capital through the sale
of equity securities, or with additional bank debt on favorable terms in the
near future. Nevertheless, due to such conditions, the Company may be required
to issue common stock to pay executives, consultants and other employees, which
may have a dilutive effect on other shareholders of the Company. Failure of the
Company to acquire additional capital in the form of either debt or equity
capital will most likely impair the ability of the Company to meet its
obligations in the near or medium term. (See - Note 1 to Financial Statements).
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and use of proceeds
During the three month period ended June 30, 2000, the Company issued two shares
of its Series A preferred stock at a per share purchase price of $250,000 for an
aggregate cash purchase price of $500,000. One of the shares was issued to an
existing stockholder of the Company. The other share was issued to nine
unrelated third-party investors, each of whom received a fractional share
corresponding to the amount invested. The Company did not employ the services of
any underwriter in connection with the sale of these shares. Each of the shares
of Series A preferred stock is convertible into 650,000 shares of the Company's
common stock. The shares of Series A preferred stock are entitled to annual
dividends equal to 8% of the purchase price. The two shares were offered and
sold in private transactions pursuant to exemptions from registration under the
Securities Act of 1933, as amended (the "Act"), that are available under Section
4(2) of the Act and Rule 506 of Regulation D promulgated under the Act.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (1)
(b) During the quarter ended June 30, 2000, the Registrant filed no
reports on Form 8-K.
Filed herewith
13
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 2000 IN STORE MEDIA SYSTEMS, INC.
(Registrant)
By: /S/ DONALD P. UHL
-----------------------------
Donald P. Uhl, President
and Chief Executive Officer
